FAQ

The Market Guy FAQ:
Frequently Asked Questions and Seldom Offered Answers

Thanks to everyone for your kind words on the column. More specifically, thanks for lying. Ryan in Port Sydney has suggested the column would be more interesting and useful with some information about my approach to investing and what the site is all about. Ask and ye shall receive. With that, jump into the stream of consciousness that is the Market Guy FAQ.

1. What is your investment philosophy?

I am a fairly conservative investor with a preference for alternatives with a cash payout. Basically, I’m addicted to dividends, distributions, and interest payments. Each time a new payout appears in my account, I get all warm and fuzzy. Sometimes I dance. How do I find such wonderful people to send me money? I focus on high quality, cash-generating companies with low debt and decent valuations. In addition, an attempt is made to be diversified across sector, geography, and asset class. This is extremely vague, but after reading a few columns, you’ll get the idea. My approach to investing is consistently applied no matter what’s going on in the markets. This adds to my confidence and allows me to sleep very well at night. It should be mentioned that I won’t allocate more than 5% of the portfolio to any new purchase. This provides a degree of protection from disasters and has saved my butt on more than one occasion. I regard myself as an investor, but have allocated a small portion of the portfolio for occasional trading.

2. How long have you been investing?

Since I was six. I’m not kidding. Market Mom is no longer with us, but one of my favourite memories involved heading down to the bank once a month to deposit my allowance. Sure, I spent some of the money on baseball cards, hoping each pack contained a mint-condition Gary Carter. But I saved the remaining cash. At the bank, I couldn’t even see over the counter, so Market Mom handled everything. Overall, I liked the idea that you could use money to make money. That seemed like a really fun thing to do. That and build model rockets.

3. What investments will be discussed in your column?

I’ll talk about anything related to the markets and personal finance. That means stocks, bonds, cash, funds, credit cards, bank fees, brokerage research, savings ideas, etc. This is very open-ended.

4. What level of financial acumen do I need to participate?

First off, I really enjoy using the word acumen (not to mention “segue” and “flan”). Second, I think all you need is an interest in the markets and personal finance. Not all of the columns will be of interest. Many will offer thoughts that don’t really apply to your situation. That’s fine. Many hockey fans still read the sports pages, even if they don’t care about baseball or football. I hope you enjoy coming to this space, if only to serve as a distraction from your bouts of occasional irregularity.

You can participate by sending emails or by using the comments feature that appears with every post. The comments have to be approved by me and you should know that I am drunk with power. Basically I want to make sure that each comment displays the characteristics of civility and positive web citizenship. So there.

5. Do you provide financial advice?

Although I can tell you what I’m up to, I don’t make any recommendations. I don’t want the credit for any successes or blame for any failures. Let me paraphrase a saying I heard not too long ago: Prognosticators predict not because they know, but because they are asked. I’m not qualified to help others with their investments and if your financial decisions are influenced by what appears on this site, then you need to be taken to the nearest psychiatric facility, sedated, and subjected to many months of individual and group therapy.

6. Why are you so interested in the markets and personal finance? These sound very boring!

Nothing could be further from the truth, Pedro! Many people regard the financial markets as boring. But I find them an endless source of fascination. This passion is no doubt rooted in my early experiences with the folks. Market Dad brought home broker reports and although I didn’t really know what they meant, I enjoyed them just the same. They wrote about companies that I already knew: Canadian Tire, Bell, and McDonalds. Well, we went to Canadian Tire every weekend, we used a Bell phone, and we ate at McDonalds. Market Dad also brought home the Financial Post (then a weekly) and that gave me an opportunity to read even more. I was surprised to learn that the markets deal with just about every sphere of human existence: entertainment, politics, sports, court drama, family squabbles, psychology, and even how well the latest McDonalds burger was selling (I especially remember reading about the dreadful performance of the McDLT…remember that one?). Market Mom always used to say that only boring people get bored. Well, the market is one-stop shopping for those wishing to busy an idle mind.

Then, in high school, came the single most important moment of my academic life. Picture this: Economics class. Loyal reader you know as Bouch in Embrun to my left (think Charlie Sheen). Mr. Allan, our teacher, came in one day and announced the following: “We’re going to begin a stock market project.” From the first moment of the exercise it was clear to everyone in the room that I was enjoying things a little too much. Several people started calling me Alex P. Keaton, after the teenaged financial whiz played by Michael J. Fox on the 80’s comedy, Family Ties. On the cover of my final project, Mr. Allan wrote the following: “50 out of 50…as expected.” Anything less and I would have been very upset.

7. What is your professional background?

I have a B.A. in law, another B.A. in psychology and an M.A. in psychology. Yes, it took me a while to figure out what I wanted to do…so I just kept taking classes. Either this makes me interesting or it makes me a flake. In any event, this qualifies me to do what I do, and that’s teach psychology as a tenured Instructor with the Department of Psychology at Carleton University. I used to conduct research in the field of behavioural finance, even won some awards, but I much prefer teaching. Much of my time these days is spent working with fourth-year honours essay students and teaching in ArtsOne, a new program designed to change the nature of the first-year experience at university. In the past, I taught at Algonquin College in the Crisis Management program and with a local, 24-hour crisis counseling service.

8. What is behavioural finance?

Great question, given that I’ll borrow from this body of research from time to time. This is a fairly new academic field that lies in the unfriendly terrain between economics and psychology. In mainstream economics, there is an assumption that people are rational economic decision-makers. Therefore, the focus is on what people should do. Psychology believes that people aren’t always rational and a focus is placed on what they actually do. Economists often dislike psychology, believing it’s about penis envy and reading minds. Psychologists often dislike economists, figuring that human activity is far too complex to be reduced to a series of mathematical equations and normative predictions.

What’s the punch line? Researchers in behavioural finance believe that psychological phenomena pervade the world of finance. They use models of human behaviour to understand financial decision-making. Questions that are of interest to such a researcher might include: Why do so many investors buy high and sell low? Why will so many people travel across town to save $10 on a tank of gas, but won’t drive across town to save $25 on a fridge? Why do people hold on to stocks that have gone way beyond their targets? Why do people focus so much on where a stock used to trade? Why do so many folks ask ridiculous prices for items at their garage sales? Why are you subjecting us to so many why questions? Couldn’t you at least include a how or a what? You get the idea.

9. What do you look like?

If you combined Brad Pitt, George Clooney, and Will Smith, the result would look absolutely nothing like me. Think of the geek you knew in high school and imagine what he might look like when he grew up. That’s me.

10. What does Market Gal look like?

Stop right there, Chester.

11. I really enjoy the investment material, but why all the personal anecdotes and pop culture references?

How I view the financial world is influenced by the experiences in my regular life (and vice versa, I suppose). I simply can’t divorce the two.

12. How often will you publish a column?

When I have something to share. Call it an irregular schedule.

13. Why are you calling this a column and not a blog?

A blog is updated each day or every few days. I’m not creative enough to publish a decent blog, but I have a shot at publishing a decent column.

14. Is the column free?

Absolutely. Death, taxes, and the Market Guy are the only things you can count on. The column can be accessed free via

a) Email subscription. There’s a “subscribe” link at the top of this page or click here.
b) RSS feed. See the blue RSS button at the top right of this page? Point and click.
c) Visiting the website with your favourite browser.
d) What, you need a fourth option?

This concludes the Market Guy FAQ. Draw your own conclusions and send them to mail@marketguy.ca

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